Commentary: African expat salaries back on the rise after tepid 2016

Salaries for expatriates working in Africa are trending upwards after 85% of mining companies increased wages in 2017, according to research by our African-specialist human resources consultancy firm Globe 24-7.

Our annual African Remuneration and Benefits Benchmarking Report released in November 2017 gathers expatriate remuneration, benefits and employment conditions data from over 2,500 expatriate workers employed by ASX, TSX, JSE and AIM-listed African mining companies.

In 2016, only 40% of companies provided salary increases for expatriate workers, but we saw a renewed optimism across the board, with forecasted increases at 75% in 2017.

These forecasted expectations were not only realized, but surpassed, with the amount of companies providing salary increases growing to 85%. This tells an important story that companies have returned or are returning to financial stability and health.

With expatriate salary reviews typically discretionary, the step to provide salary increases is effectively “handing back” some of the company’s profit — indicating that companies operating in Africa are seeing their confidence return.

While reintroduced salary increases is good news for expatriate workers, the amounts are modest, with an average 2% given in 2017.

This is up from 1.3% in 2016, and forecasts for 2018 could be higher at 2.3%.

The salary increase amount may not sound significant, but the trend increasing year-on-year supports the view that the industry is strengthening and conditions are improving.

Another indicator of market stability highlighted in the report is the reduction in the overall involuntary turnover rate from 18% in 2016 to 9% in 2017. This highlights that redundancies, dismissals and retrenchments have become far less prevalent during the year, and the rightsizing seen in previous years is happening less often.

Africa remains a male-dominated workplace, with only 6% of expatriate workers on average being female, although a number of companies are taking steps to implement programs to see this number increase.

The mix of expatriates has never been higher, with over 90 different nationalities represented in the African mining community. Fifty percent of this group come from within the African continent itself.

What we’re seeing in Africa this year is much greater stability than the previous three to four years, but cost-management remains priority.

Understanding that expatriate salary benchmarks and other employee cost-related items such as rosters, flights, travel class, insurance providers, and long-term and short-term incentives all impact the bottom line has become critical for management to help make business decisions concerning human resource policies and practices.

With Africa experiencing a re-emergence of activity — particularly through newer commodities such as lithium, cobalt and graphite — we expect 2018 to see a new injection of skilled employees in the expatriate marketplace.

— Lachlan Spicer is principal and CEO of Globe 24-7 Pty Ltd., a consulting firm specializing in human resources and executive search with eight offices on six continents. Visit www.globe24-7.com for more information.